Two-Thirds of New Investments in the Czech Republic Have High Value Added

The coronavirus pandemic has helped to accelerate CzechInvest’s efforts in recent years. Despite the crisis, there is a rising trend in the share of investments with high value-added, i.e. investments focused on technology and research and development in strategic sectors.

In 2020, this involved two-thirds of all investments arranged by CzechInvest, whereas only one-fifth of new projects in 2018 fulfilled the criterion of high value added. A quarter of last year’s projects are smart, i.e. localized so that they benefit the given regions, particularly those that are structurally disadvantaged.

Near 80% of the arranged investments comprise expansions of companies that are already operating in the Czech Republic. The situation here thus also mirrors international trends.

“In 2020, we arranged 27 new investment projects in which the companies have pledged to invest CZK 13.5 billion in the coming years. Despite a certain decline associated with the coronavirus pandemic, investors remain interested in placing their projects in the Czech Republic. Furthermore, we anticipated a lower number of projects due to the stricter conditions arising from the amendment to the Investment Incentives Act. So, we are all the more pleased that in spite of these facts, two-thirds of the arranged investments will bring higher value added,” says Patrik Reichl, CEO of CzechInvest.

This is historically the largest share of projects with high value-added, which include shared-services centres, technology and IT centres and manufacturing projects involving investments in digitalisation and automation.

The new investment projects are focused particularly on production and development of software at business support services centres. The areas on which CzechInvest focused investment support last year included electromobility, software development, healthtech, data centres, artificial intelligence, and advanced materials.

The situation here thus mirrors international trends.

“A good example of an investment with high value added, which goes hand in hand with the trend of digitalisation, is the activity of the company Wandera CZ, which is planning to expand its software development centre with focus on security and administration of mobile data in the Brno-City district. rPET InWaste is planning its own research, development and processing of PET flakes into recyclable material that will subsequently be used in the production of new recyclable plastic bottles. I’m pleased that companies still have the desire to invest during this difficult time and are coming up with such interesting projects,” says Petr Očko, Deputy Minister of Industry and Trade for Digitalisation and Innovation.

Nearly 80% of the arranged investments comprise expansions of companies that are already operating in the Czech Republic. Besides domestic firms, American, Japanese and Finnish companies plan to invest the largest amount of money in the Czech Republic in the coming years.

In terms of the number of projects, the biggest investors are the United States, Switzerland, Great Britain, Japan, Germany and China.

CzechInvest recorded the greatest inflow of projects and expansions last year in the Central Bohemia, South Moravia and Moravia-Silesia regions. However, it cannot be said that the coronavirus pandemic did not have any effect on the investment market.

“Investors have to contend with the high level of uncertainty associated with the pandemic and thus often defer their final decisions on the placement of investments. Therefore, we are still negotiating and communicating with investors that we were in contact with last year and that had expressed interest in investing in the Czech Republic. To better illustrate – this refers to nearly 80% of the companies from last year,” explains Veronika Zajícová, head of CzechInvest’s Investment and Foreign Operations Division. 

“In general, development of the market and of demand is expected. Companies are starting to look at their global operations, i.e. their activities in individual countries and on individual continents, in light of the pandemic and have to better consider their supply chains. That can be an opportunity to attract new technology firms to the Czech Republic.”